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HGSMEs & Innovation “Access to Finance” Module

HGSMEs & Innovation “Access to Finance” Module. A Proposal for a Pilot Survey Questionnaire (Draft). The Objectives of the Pilot Survey. The Main Objective :. Detecting and Tracking Financing Gaps !. What for an approach ?.

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HGSMEs & Innovation “Access to Finance” Module

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  1. HGSMEs & Innovation“Access to Finance” Module A Proposal for a Pilot Survey Questionnaire (Draft) P. Sicari, OECD Statistics Directorate EIP - Entrepreneurship Indicators Programme

  2. The Objectives of the Pilot Survey The MainObjective: Detecting and TrackingFinancingGaps ! Whatforanapproach? Limitedadvantagesfrom a staticapproach: the analysisoffinancinggapsmustvaryaccordingtofirmsize and sectorofactivity Determiningwetherdebt and equity finance vehicles display a different impact on firms’ growth, takingfirmsize and sectorofactivityinto account CollateralObjective: P. Sicari OECD StatisticsDirectorate

  3. The Survey’s Target High Growth and Innovative SMEs Becauseoftheirpioneeringrole in economicgrowth. Becauseoftheireasieraccesstorisk capital, thatallowsfor a fair comparisonof the (allegedly) differentimpactsofdebt and equity finance on growth. P. Sicari OECD StatisticsDirectorate

  4. Main Features of the Survey Questionnaire (1) • Twodifferentbutparallellevelofanalysis: • Growth-OrientedInvestments and Expenditures • FinancingVehicles The survey will highlight not only the firms’ demand for every category of financing vehicle, but also its causal link to specific forms of investments! P. Sicari OECD StatisticsDirectorate

  5. Main Features of the Survey Questionnaire (2) • Firmswillberequestedtospecify: • The total amountofnewGrowth-OrientedInvestments and Expendituresmadeduring the referenceyear. • The amountsofnewGrowth-OrientedI&Esdirectedto the followingsub-categories: ICT, PRODUCT, PROCESS and HUMAN RESOURCES. • How, in percentageterms, the 4 amountsof the previouspointweresubdividedinto (suggested) components. P. Sicari OECD StatisticsDirectorate

  6. Main Features of the Survey Questionnaire (3) • Firmswillberequestedtospecify: • HownewGrowth-OrientedInvestments and Expenditureswerefinanced, byindicating the total amountcoveredthroughDebt and/or Equity finance. • How, in percentageterms, total amountsofDebt and Equityweresubdividedinto single Debt and/or Equityfinancingvehicles. • WhetherplannedGrowth-OrientedI&Eshavebeensomehowaffectedbyaninability in borrowingsufficientfunds. P. Sicari OECD StatisticsDirectorate

  7. Main Features of the Survey Questionnaire (4) Specificsectionssurveying the relationshipbetweenfirms and debt/equity finance providers. Objective ? Tryingtodetermine the exact source ofpossiblefinancinggaps: Are theydemand-side or supply-side? P. Sicari OECD StatisticsDirectorate

  8. Main Features of the Survey Questionnaire (4bis) Howtodefine the exact nature offinancinggaps? • Byexactlydetermining the temporalsequenceofactive and passive interventionsofallpossible finance providers (Whowas the first provider the firmappliedto? Successfully or unsuccessfully?) • Bydemanding the firmto indicate allpossiblereasonsthatcouldexplainitsfailure in reachingagreementswithdebt and/or equityproviders P. Sicari OECD StatisticsDirectorate

  9. The Policy Implications (1) Usually claim they have a restricted access to financing due to shortage of supply SMEs Claim there is plenty of “unplaced” financing due to low average quality of firms’ investment projects FINANCE PROVIDERS P. Sicari OECD StatisticsDirectorate

  10. The Policy Implications (2) POLICY MAKERS What policy to foster Access to Finance? Supply-Side Oriented Demand-Side Oriented Policies aiming at improving HGISME investment readiness and fostering the quality of their growth strategies. Policies aiming at easing access to bank loans for HGISMEs, usually by means of state guarantee schemes. P. Sicari OECD StatisticsDirectorate

  11. The Policy Implications (3) POLICY MAKERS ….the Current Situation…… Absolute prevalence of supply-side-oriented supporting policies Increasing commitment towards rationalization of public spending P. Sicari OECD StatisticsDirectorate

  12. The Policy Implications (4) …to conclude, an example of the main policy issues addressed by the survey questionnaire: • If almost all public policies supporting SME’s access to finance aim at reducing restrictions by compensating finance providers for higher operational risks; • and if, as it seems to be, there is no clear evidence of any global shortage of financial resources to invest: Aren’t we by chance just fuelling market imperfections by not focusing on the demand-side in order to improve the investment readiness of firms, while preferring to act through risk compensation schemes that might produce inefficient spending??? (additional resources would flow right were they are already available) P. Sicari OECD StatisticsDirectorate

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